Sparrow Manufacturing Manufactures Small Parts and Uses an Activity-Based Costing

question 44

Multiple Choice

Sparrow Manufacturing manufactures small parts and uses an activity-based costing system. $\begin{array}{|l|r|l|l|}\hline \text { Activity } & \begin{array}{l}\text { Est. Indirect Activity } \\\text { Costs }\end{array} & \text { Allocation base } & \text { Cost allocation rate } \\\hline \text { Materials } & \$ 70,000 & \text { Material moves } & \$ 2.00 / \text { move } \\\hline \text { Assembling } & \$ 240,000 & \text { Direct labor hours } & \$ 8.00 / \text { dir. labor hour } \\\hline \text { Packaging } & \$ 80,000 & \text { \# of finished units } & \$ 0.80 / \text { finished unit } \\\hline\end{array}$
The following parts were produced in October with the following information:
$\begin{array} { | l | r | r | r | r | } \hline \text { Part } & \text { \# Produced } & \text { Materials Costs } & \text { \# Moves } & \text { Dir. Labor Hrs. } \\\hline \text { A } & 2,500 & \$ 2,500 & 800 & 200 \\\hline \text { B } & 3,500 & \$ 7,000 & 1,500 & 300 \\\hline \text { C } & 4,500 & \$ 11,250 & 2,200 & 1,000 \\\hline\end{array}$
- Total assembly fees for part B is:

• A)$ 600.
• B)$12,000.
• C)$ 1,600.
• D)$ 2,400.

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Definitions:

Ileum

Third portion of the small intestine, extending from the jejunum to the ileocecal opening into the large intestine.

Jejunum

Second portion of the small intestine; located between the duodenum and the ileum.

Hepatocytes

The main functional cells of the liver, responsible for a wide range of metabolic, detoxification, and synthetic functions.

Synthesize Bile

The process of producing bile, a digestive fluid created in the liver and vital for the digestion and absorption of lipids in the small intestine.